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Oracle Suit Could Bring a World of Woe to SAP

Opinion: The very survival of SAP could be at stake if Oracle is able to prove its charges in federal court that its enterprise applications rival illegally downloaded "vast libraries" of Oracle software and documentation.

It will be fascinating to learn what possible answers and defenses SAP has to offer to Oracles astounding charges that its enterprise applications archrival has engaged in wholesale theft of software and customer support documentation.

The 44-page complaint that Oracle filed on March 22 in U.S District Court in San Francisco contends that Oracle meticulously traced and monitored multiple unauthorized intrusions into its customer support Web site. Oracle claims that it tracked many "lightning-speed" downloads of software files and documents that went far beyond the scope of any single customers license agreement.

So far, all SAP is saying officially is that it is "still reviewing the matter" and as a result will follow its "standard policy of not commenting on pending litigation."

The next question that comes to mind is whether any of this activity, if it occurred, was done with the knowledge and approval of top SAP executives, or whether it was some mindless rogue operation carried out at SAPs TomorrowNow subsidiary in Texas.

If Oracle can prove its civil charges that SAP employees systematically looted intellectual property from the Web site, the next step could be state and federal investigations that could result in indictments.

Unless SAP can come up with some plausible explanation as to why people inside its organization were apparently downloading "vast libraries" of Oracle products, a lot of SAP jobs, reputations and cash could go down the drain. The very existence of the company would conceivably be threatened by this brewing scandal.

This lawsuit has the potential of making the recent Hewlett-Packard corporate spying and "pretexting" scandal look like childs play, because it involves intellectual property potentially worth billions. Of course, Oracles lawyers have written the complaint to make it sound as sinister as possible. We have no way of knowing whether any allegedly purloined software and documents are even remotely as valuable and damaging to Oracles interests as it claims. We only have Oracles generalized words as to what was stolen and how much.

Oracle and SAP, which is based in Walldorf, Germany, have been locked in intense competition since SAP because a major player in the U.S. enterprise applications market. Every strategic move Oracle has made over the past five years has been aimed at supplanting SAP at the top of the ERP (enterprise resource planning) market.

Oracle is well known for taking any competitive edge that it can find. If even a fraction of the charges listed in Oracles complaint prove to be true, SAP may have made it a lot easier for Oracle to relegate its rival to also-ran status.

SAP acquired TomorrowNow in January 2005 to provide third-party support for PeopleSoft and JD Edwards ERP applications. As the Oracle complaint notes, SAP acquired TomorrowNow within a month after Oracle completed the acquisition of the PeopleSoft and JD Edwards product lines.

When SAP announced the TomorrowNow acquisition, executives of both companies said the purpose was to build a top-notch third-party IT support service for PeopleSoft and JD Edwards applications at a lower cost than Oracle itself would provide. TomorrowNow hoped to take advantage of customer dissatisfaction with Oracles buyout of PeopleSoft/JD Edwards.

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